How Will The Space Economy Change The World?

Space Economy: To Infinity and Beyond

The strategic and political goals associated with space activities since the inception of space exploration are increasingly linked with the need to generate economic and social returns. Space is a global interest and 58 countries invested more than $10 million in space programmes in 2017.

Space is emerging as one of the biggest commercial opportunity pools for businesses, industries, and countries to tap into over the coming few decades. With a five-year uninterrupted growth trend, the global space economy — encompassing a range of activities involved in researching, exploring, and utilising space — was valued at $447 billion (Space Foundation, The Space Report 2021, Q2). In 2017, Morgan Stanley estimated revenue generation of more than $1 trillion by 2040, with the satellite broadband internet access representing the most significant projected growth of 50% and as much as 70% in the most bullish scenario (Space Investment Implications of the Final Frontier, Morgan Stanley Research, 2017).

• The space economy is worth at least $469 billion, according to a new report.
• The term ‘space economy’ covers the goods and services produced in space for use in space.
• Digital infrastructure in the sky has brought benefits to many industries and is helping in the fight against climate change.
• However there are concerns about the amount of space debris in Earth’s orbit, which NASA says now totals 9,000 tonnes.

The Space Economy Is Booming

The term “space economy” covers the “goods and services produced in space for use in space, such as mining the moon or asteroids for material”, according to the Harvard Business Review. The OECD defines it as any activity that involves “exploring, researching, understanding, managing, and utilizing space”.

The Space Foundation’s The Space Report 2022 estimates that the space economy was worth $469 billion in 2021 – a 9% increase from a year earlier. And over 1,000 spacecraft were put into orbit in the first six months of this year, the report says – more than were launched in the first 52 years of space exploration (1957-2009).

But the space sector is not only a growth sector in itself – it’s also proving a key enabler of growth and efficiency in other sectors. The European Space Agency says the deployment of new space infrastructure has brought benefits to industries including meteorology, energy, telecommunications, insurance, transport, maritime, aviation and urban development.

Most of this money came from the private sector rather than the public sector, the report says, estimating that more than $224 billion was generated from products and services delivered by space companies.

There has also been an increase in state-backed investment in space projects around the world, according to the Space Foundation report. There was a 19% jump in overall government spending on military and civilian space programmes last year. India raised spending by 36%, China invested 23% more and the US pumped another 18% into space ventures.

Past to Present: A Space Odyssey 

Greed for political prestige, along with curiosity to delve into the unknown, to unravel the mysteries the space is shrouded in, functioned as stimuli for the space ventures. The journey of space exploration and utilisation began in 1957 when the USSR launched ‘Sputnik 1’, the first artificial satellite to orbit Earth. Soon after, the United States consolidated space exploration activities into a government agency, thus establishing NASA. 

Following a series of Apollo missions, Neil Armstrong took a “giant leap for mankind” as he became the first human to walk on the lunar surface in 1969. From here onwards, the space sector witnessed exponential growth as we progressed through various space shuttles and the international space station. Program Artemis is the next big step, working towards building a lunar economy and eventually making humanity a multi-planetary species. With such huge advancements, we are moving from space exploration to its commercialization. 

This dynamics led some analysts to declare that the space industry could become the next trillion-dollar industry by 2040. The main current trends which are impacting the Space Economy include:

• A still increasing public interest and investment in space activities worldwide;
• An unprecedented level of private investment in space ventures, linked to a higher attractiveness and expected profitability and a growing Venture Capital (VC) market;
• An ever increasing number of actors;
• Still growing space industry revenues;
• The further development of commercial activities worldwide, including ones based on smallsats/cubesats, and the development of commercial activities in new fields, e.g. micro-launchers and space flight;
• A traditional space industry, still generating the main share of revenues, but facing more competitive and uncertain markets;
• The further development of the New Space worldwide; and
• The further integration of space into the society and economy leading to more value creation and more socio-economic benefits.

Innovation Is Fuelling The Space Economy

What’s happening today has been described as a “space renaissance” – a period when technological innovation is significantly reducing costs and creating new capabilities.

The CEO of Planet Labs, Will Marshall, told the World Economic Forum’s Annual Meeting at Davos in May that rocket prices have dropped fourfold in the past decade. Companies that might once have had to pay hundreds of thousands of dollars to put a satellite into space can now do so for a fraction of that, as cheaper components have become available.

Marshall says this means we’re now producing 10 times more Earth imagery by area than five years ago, and 10 times the bandwidth of communications is being transmitted around the planet.

He also says better imaging is increasing accountability. For example, commercial satellite data is providing a bird’s-eye view of the conflict in Ukraine, allowing the world to witness and record events on the ground as they occur.

Satellite imagery can also allow farmers to monitor crops, businesses to track their environmental, social and governance performance, and governments to monitor CO2 emissions, Marshall says.

Socio-Economic Impacts from Space Investments 

Space systems play an increasing role in the functioning of modern societies, their strategic order and their economic development thanks to the use of satellite technology in navigation, communications, meteorology and Earth observation. Space technologies also affect agriculture planning, disaster management, medicine, land monitoring, transportation and urban planning. Its manifold fields of application make space an engine of economic growth. Despite the economic crisis, institutional space budget faced less decrease than other productive sectors. OECD underlined that, even though space often has a reputation of being an expensive industry, all G20 Countries invest in their respective national space program a very small percentage of the GDP (Gross Domestic Product). The benefits provided by the use of space assets range from qualitative aspects, such as strategic advantages and improved decision-making processes based on satellite imagery, to monetarily quantifiable ones, such as cost-efficiency and increased safety derived from using satellite navigation tools for ground, maritime and aviation applications. Scientific and technological innovations are making space applications accessible to more people, being vehicle of social and economic growth also for developing Countries.

Conclusion

The world is changing rapidly in unprecedented ways, with the space industry being a substantial, innovative gear. The invaluable data and information provided by space infrastructure over time will help policymakers in making effective decisions at scale. The alignment of expanding vibrant space economy and sustainability might become the pillar of modern society. Space services support the development of the economy in various ways, from job and revenue creation to helping achieve SDGs by satellite imagery for filling in the key ESG (Environmental, Social, and Corporate Governance) data gaps. Initiatives by large firms, high levels of private funding, burgeoning interest, and advances in technology suggest that the space economy is ordained to undergo dramatic upheavals in the coming times. 

Reference Links

According to a research report published by Spherical Insights & Consulting, the Global Satellite Earth Observation Market Size to grow from USD 7,705.9 billion in 2021 to USD 14,166 billion by 2030, at a Compound Annual Growth Rate (CAGR) of 7% during the forecast period. The expansion of satellite earth observation is due to the increased usage of earth observation satellites in a variety of end-use industries, and the integration of digital data analysis and geospatial data fusion have all contributed to the market value increase.

In 2020, the revenue of the satellite earth observation market worldwide amounted to approximately 6.7 billion U.S. dollars. This revenue is projected to climb to some 15.9 billion by 2032. Government and defense purposes are forecast to be the most important end user in the earth observation solution market, and it is expected to reach a value of over 6.1 billion U.S. dollars by 2032.